The Swedish 1997 Development Year

On the third day it happened. The change could almost be felt in the air. From then on we had twenty managers eager to learn as much as possible about market economy and financial management.

 The three workshops in the spring were followed, in the early fall, by one that focussed on the issues related to the privatization of Latvenergo.

Helping managers cope with, manage and also promote the changes that economic reforms force upon their organizations became one of the main themes during the rest of the year. After the EBRD sponsored Latvenergo assignment Lennart and our corporate change expert Lars Dahlström tackled the problems of a large textile firm in Macedonia facing a future without a large Yugoslavian home market. Meanwhile Bo Andréasson installed a Management Information System in a regional water utility in Estonia and continued to nudge Tanzania’s state owned industrial support organizations towards a new and more sustainable future. Later on Christer Fehrling and Lennart visited Nigeria and UAC to be moderators for a management workshop which became a real morale booster for both UAC’s management team and us.

But there was to be more in Eastern Europe. Lennart, with market research assistance by Joakim Hillberg, labored with Swedfund and EKN to restructure a stalled Swedish/ Russian joint venture project while Åsa Königson was the financial analyst in a feasibility study team that assessed a ferry project in Estonia for EBRD.

But Bo Andréasson got the most arduous of our eastern European assignment – a market study of the appliance sector in Russia. Try to make appointments with twenty Russian industries from Kaliningrad to Siberia and you will see! Add to that a couple of more meetings with industries in Belarus and Ukraine and you’re ready to strangle somebody with all the red tape that is generated.

Did you know that a business visa to Belarus costs USD180 and takes three weeks to get? That’s market economy.

The 1997 East European project portfolio

Privatization has been a specialty and leitmotif for us for several years. But after almost five years and close to 200 privatized industries there are not that many companies left for our Mozambican client GREICT. What remained of Mozambique’s paper industry was still left, however. Bo Andreásson and Ulf Weidling did a prospectus for the renewal of the Mozambican paper industry as well as a detailed assessment of the issues involved in the privatization of Tanzania’s Southern Paper Mill in Mufindi for which we got a lot of credit.

Subsequently Bo and Joakim Hillberg (who later during the year decided to join us as a permanent "development consultant") carried out a first assessment of the early effects of Tanzania’s industrial privatizations.

Tanzania was the main hunting ground for Swedish Development’s survey specialist Jens Larsen. There he did several market surveys and two project appraisals. In between those he also joined Lennart to appraise a building materials project in Cape Verde.

The 1997 assignments in Africa

By definition development aid has to be based on optimism. When we define a development project we invariably hope for more improvement and better results than most projects can deliver, especially those in environments as difficult as in Africa. Project evaluation, while important, is therefore often difficult for both the evaluator and those, whose efforts are judged.

In 1997 Sida asked us to do a total of three evaluations all of which concerned projects in Africa. A housing finance project in South Africa, which Lennart Königson and Albena Melin reviewed, got high grades, even acclamation. For the largest evaluation assignment, that of Sida’s institutional support to the telecom sectors in southern Africa, we had to deliver a more disappointing verdict.

For the third evaluation (of a transport sector reform program in Namibia) Åsa and Lennarrt were joined by Gordon Tamm, one of Swedish Development’s founders. He brought his usual gusto to the task.

We hope the client has recovered.

We have had little time left for the rest of the world and in the beginning of the year Asia was so busy anyway with all the praise heaped upon it by some of the world’s most famous economists and economic institutions. You may recall how the world’s leading economists almost fell over their feet in praise over the sound policies pursued by many of East Asia’s nations.

Here is a quote from a recent publication that two World Bank economists might be wishing that they never wrote.

Our recommended reading for these self ordained oracles is book called "Against the Gods The Remarkable Story of Risk" by Peter Bernstein. Its main theme is that markets always overreact – both ways.

But if you think South Korea’s and Thailand’s financial sectors have a few more flaws than those observed by the World Bank, wait till you see China’s. We tried to diagnose the large Chinese banks a few years ago and that was as scary as financial analysis can be.

But the current crisis in East Asia may prove to be a blessing in disguise if it encourages the Chinese to abandon their plans of making the Yuan convertible. The crisis may also make us realize that it is the return on the GDP boosting investments - not the investments themselves – that determines if there can be long-term growth.

Our 1997 activities in Asia were confined to a study of a telecom project in Bangladesh which Åsa and Swedish Development’s in-house telecom expert Karl Erik Olofsson carried out for Sida. The Middle East was visited by Bo for the purpose of a waste water treatment plant appraisal in Gaza. In the Western Hemisphere Åsa did a desk study of an urban transport project in Kingston Jamaica.

The other 1997 assignments

But 1997 was also the year when the green winter we normally call summer turned tropical.

Jens fine-tuned his climbing skills in order to make it into the top ten Swedish climbers in the fall.

When fall finally did arrive Åsa and Gordon Savage (our administrative assistant since a year) both left for the UK. In the case of Gordon it was his native Scottish highlands that lured him back whereas Åsa was captivated by a more mundane MBA course at Warwick University.

In late fall Jens the Climber managed

• to fall of a cliff,
• be rescued by a helicopter,
• become front page news and
• almost kill himself.

He was duly punished with home office duty for the remainder of the year and Brita Holmen took his place for this year’s last Tanzania visit and project assessment.

In December Lars, who joined us together with Joakim, spent a week in Washington with Lennart. They met met a lot of old IFC friends and decided to do something Swedish Development’s clients and collaborators would appreciate – namely to shorten our long and cumbersome name.

After having read all of this